Monday, July 3, 2017

Nearly 40 Percent of Russian Economy Still in Shadow Sector

Paul
Goble

Staunton, July 2 – According to the
international Association of Chartered Certified Accountants, 39.3 percent of
the Russian economy remains in the shadow sector, making Russia one of the
leaders in this regard and meaning that 35.55 trillion rubles (600 billion US
dollars) of economic activity there are off the books and not paying taxes.

Russia has surpassed the level in
Kenya (where it is 26.8 percent) but not yet reached the level of Nigeria (47.7
percent), the ACCA says.And it lags far
behind the three countries that have the smallest shadow sectors, the United
States (7.69 percent), Japan (9.89 percent), and China (10.17 percent).

Shadow economies flourish where
taxes are high and thus there is a great deal of tax avoidance, where
government pressure on business is intense and where the level of poverty is
high as well.In Russia, the ACCA says,
all these things are true as are underlying weaknesses in democratic
institutions and the current recession.

According to one poll, two-thirds of
Russians either support or at least do not oppose the shadow economy because
they back the desire of businesses to avoid paying taxes or registering with
the state.Indeed, this public support
for the shadow economy is currently at the highest levels in modern times.

A major reason for this, the ACCA
says, is that Russians don’t view business as the cause of the process in which
“the poor are becoming poorer and the rich richer” because in Russia, in the
view of the public, “the richest people are not entrepreneurs but bureaucrats”
and so they can support the efforts of the former to escape from the power of
the latter.